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This course has been designed by Muaz Popatia [email protected] www.facebook.com/muaz.popatia.trainer Conducting a HR Audit By Muaz Popatia 2014

Transcript of Conducting hr audit mp-final

This course has been designed by Muaz Popatia [email protected] www.facebook.com/muaz.popatia.trainer

Conducting a HR Audit

By Muaz Popatia

2014

This course has been designed by Muaz Popatia [email protected] www.facebook.com/muaz.popatia.trainer

Rules of the House!

Phones on vibration / silent.

Take urgent calls only (leave on need basis)

No late arrivals.

First Tea at 10:30 am (15 Minutes),

Lunch at 1:00 (60 Minutes)

Second Tea at 3:30pm (15 Minutes)

Questions may be asked anytime (just raise your hand!)

This course has been designed by Muaz Popatia [email protected] www.facebook.com/muaz.popatia.trainer

Course Objective

To understand fundamentals of conducting an Audit.

To understand key concepts regarding HR Audit.

To review some basic check-lists regarding HR Audit

pertaining to selected HR sub-functions.

Give me your expectation also!

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ContentsUnderstanding the Fundamentals:The HR Cycle (Activity & Purpose Based)Understanding how the HR function becomes a Strategic Partner?Why is an audit required?Understanding the “mind-set” an Auditor should haveWhat is an HR Audit?The link between HR Audit and Other Audits.Purpose & Scope of the HR Audit (HRA)The HR Audit CycleThe benefits of the HR Audit

Planning to Implement:Planning the HRA (Timing and Implementation)Preparing for HRAHR Audit TOR (Terms of Reference)

Implementing to Conduct:Taking the “HR Temperature”Designing a QuestionnaireCollecting Information

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Contents

HR Functions to Audit:

Recruitment & Selection

Compensation & Benefits

Orientation & Placement

Training & Development

Performance Management

Analyzing to Recommend:

Analyzing the Data.

Identifying Areas of Improvement.

Preparing Recommendations.

Reporting to Present:

Documenting the findings.

Presenting the recommendations.

Preparing a HRA report.

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Understanding

the Fundamentals

Module - I

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Understanding the Fundamentals

Elections in the Jungle!

Monkey Won; Lion lost.

Lion threaded Lady Giraffe.

Giraffe went to Monkey for Help.

Monkey jumped from tree to tree.

On question from Giraffe.

Monkey said “Look how active & angry,

I became when you told me that the

lion threatened you.”

We need results not activity.

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Understanding the Fundamentals

The HR Cycle – Activity Based

Recruitment & Selection

Operations

Compensation & Benefits

Training & Development

Performance Management

Entry /

Exit

Short-listing, Hiring,

Interviewing &

Joining Formalities

Orientation to the

Organization and Job

Payroll & Budgets

Staff Training &

Development, and

Organizational

Development

Promotions &

Increments

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Understanding the Fundamentals

The HR Cycle – Purpose Based

Acquire

Maintain

Enhance

Reutilize

Recruitment & Selection

+

Operations

Compensation & Benefits

Training & Development

Performance Management

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Understanding the Fundamentals

How HR becomes a Strategic Partner:

Information

Analysis

Decision

HR Info in Time

HRIS

HRMS

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Understanding the Fundamentals

Audit:

Is an official inspection of an organization's accounts, typicallyby an independent body.

New Audit:

The new audit definition has gone to audit all other areas oforganizations as well, some of them are:

Job Audit:

Knowledge Audit

Skills Audit

Human Resource Audit

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Understanding the Fundamentals

Job Audit:

A tool used to classification of jobs, positions or tasks.

Revisiting Jobs to see if new classification or compensation

related matters is required.

Knowledge Audit:

A knowledge audit is an effort to understand where an

organization stands in terms of knowledge management and its

knowledge assets. (Knowledge management (KM) is the

process of capturing, developing, sharing, and effectively using

organizational knowledge)

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Understanding the Fundamentals

Skills Audit:

A skills audit is essentially a process for measuring and

recording the skills of an individual or group. The main purpose

for conducting a skills audit in an organization is to identify the

skills and knowledge that the organization requires, as well as

the skills and knowledge that the organization currently has.

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Understanding the Fundamentals

Why do we need an Audit?

Audit is supposed to help us in:

Identify Risks

Find Better Ways and Best Practices

Partner with you to identify solutions

Prevent problems.

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Understanding the Fundamentals

• Audit Notification

• Entry Meeting

• Audit Survey

• Fieldwork

• Draft Report

• Exit Meeting

• Management Response

• Final Report

• Follow-up

Steps in Audit

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Understanding the Fundamentals

Audit Notification

First letter / info to the head of the area to be audited.

Entry Meeting

First meeting with those who are to be audited, when and for what? Also to decide on the basics such as equipment and space provision.

Audit Survey

Auditors conduct research and observe the audit areas to enhance their knowledge of processes.

Fieldwork

Actual review and checking of the documents.

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Understanding the Fundamentals Draft Report

First report submitted on the what the Audit found out.

Exit Meeting Conducted with the same personnel who attended the first meeting. Focuses on

approval and agreement on the draft report. Changes may be made.

Management Response Response from the area-owners (within 30 days).

Final Report Along with reply from the area-owner, Audit submits the report to

Heads/CEO/Audit Committee.

Follow up After six to twelve months a follow-up is done.

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Understanding the Fundamentals

Who may conduct an Audit

Internal Auditors:

Internally Trained staff who understands the process.

External Auditors:

An external agency (organization) auditing another.

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Understanding the Fundamentals

Internal Audit:

Reasons:

Checking the value-addition (in our case – HR’s) to the

organization.

Conformance to Procedures.

Effectiveness processes and systems.

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Understanding the Fundamentals

External Audit:

Reasons:

Check compliance to key legislation & regulations.

Build customer confidence / employer of choice

To verify certain claims that you may have made.

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Understanding the Fundamentals

Understanding the Mind-set an Audit should have:

(Internal Auditor)

A catalyst (for improvement)

An advisor

A reported of Facts

An internal auditor can be a type of an internal

CONSULTANT for the HR Department

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Understanding the Fundamentals

Understanding the Mind-set an Audit should have:

Attributes of Highly Effective Internal Auditors (as Identified by the Institute of Internal Auditors) are:

i) Integrity

ii) Relationship Building (People Skills)

iii) Partnering (Service Oriented)

iv) Communication

v) Team Work

vi) Diversity

vii) Continuous Learning (Focused)

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Understanding the Fundamentals

What an HR Audit is?

Systematic Review of all HR Procedures / Processes.

It measures that current “performance” level.

It identifies the “way forward” to improve the HR practices

Reveals weaknesses and strengths of the department.

It is a diagnostic tool.

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Understanding the Fundamentals What an HR Audit is?

As per SHRM

An HR audit involves an objective look at the company’s HR policies, practices, procedures and strategies.

To protect the company, establish best practices and identify opportunities for improvement.

An objective review of the company’s “current state” can help you evaluate whether specific practice areas are adequate, legal and/or effective.

The results can provide decision-makers with the information necessary to decide what areas need improvement.

An HR audit can be structured to be either comprehensive or specifically focused, within the constraints of time, budgets and staff.

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Understanding the Fundamentals Types of HR Audit?

Compliance: Focuses on how well the company is complying with current

federal, provincial and local laws and regulations.

Best Practices: Helps the organization maintain or improve a competitive

advantage by comparing its practices with those of companies identified as

having exceptional HR practices.

Strategic: Focuses on the strengths and weaknesses of systems and

processes to determine whether they align with the HR department’s and/or

the company’s strategic plan.

Function-Specific: Focuses on a specific area in the HR function (e.g.,

payroll, performance management, records retention, etc)

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Understanding the Fundamentals Link with Other Audits?

Job Skills Audit

Knowledge Audit

Skills Audit

Gives you an in-sight into the utilization of your organization’s

“Human Capital”

Human Capital: The skills, knowledge, and experience

possessed by an individual or population, viewed in terms of

their value or cost to an organization or country.

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Understanding the Fundamentals

Purpose of HR Audit

The purpose of a Human Resources audit is to assess theeffectiveness of the Human Resources function to ensureregulatory compliance.

To look for potentially serious problems (time bombs)

To find areas needing improvement

To document processes for use in merger, reorganizationor inspection

To address compliance issues

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Understanding the Fundamentals

Scope of HR Audit

Can be conducted in all areas:

Recruitment & Selections,

Operations,

Compensation & Benefits,

Training & Development,

Performance Management or

Employee Relations & Industrial Relations.

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Understanding the Fundamentals

Human Resource Audit Cycle

Pre-Audit Decisions

Audit Planning

Conducting

The Audit

Data Compilation

& Analysis

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Understanding the Fundamentals

Ultimate Goal or Benefit of HR Audit:

To gain valuable information regarding current HR practices

and procedures & determine readiness to meet current and

projected organizational needs.

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Planning

to Implement

Module - II

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Planning to Implement

How often should an HR Audit be conducted:

You may decide based on your needs:

On-Going Review (Legally Active Areas)

Annual Basis

Every 6 months

Occasionally for certain “important” areas.

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Planning to Implement

Preparing for HRA

You need to decide on the following:

Who should conduct the audit:

Internal HR Staff

External Auditor

Internal Auditor

Cross Functional Team

Company Lawyer (especially for Legal Compliance)

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Planning to Implement

Preparing for HRA

You need to decide on the following:

Which areas will be audited and for what period:

Identify the specific area / sub-function. (Scope)

Identify the time period for which records will be audited

Identify the Contact Person – To resolve communication needs.

Last but not the least:

You may like to have a formal “Terms of Reference” signed.

TOR: the scope and limitations of an activity or area ofknowledge

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Planning to Implement

Preparing for HRA

Documents & Checklists to be reviewed:

Policies and Procedures (SOPs)

Records

Previous Audit Reports

Training Records

Personnel Records / Staff Files

Accounting Records

Disciplinary Records

ANYTHING that can prove that ongoing systems areoperating as intended and as required!

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Implementing

to Conduct

Module - III

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Implementing to Conduct

Taking HRTemperature

Before you ask someone (from the concern to-be-auditedArea) about their work. It is a good idea to have a candidmeeting.

This meeting should be focused around “breaking the ice”and letting the individual know that you are there NOTto catch their mistakes but you are there to correctthem.

You also need to show confidence in them that they arequalified for the job. Its just that your purpose is to helpthem improve.

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Implementing to Conduct Designing a Questionnaire

Identify the “risks” or what can go wrong with the function.

The more regulated the industry the more “detailed” your checklist needs to be.

Make sure you check validity of licenses and permits.

In cases of food related items, compliance with “expiry” dates is a must.

In factories safety is of prime importance.

Always address the “Information Security” perspective of the record-keeping & access.

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Implementing to Conduct

Steps in Conducting an HR Audit

Collect Information

Evaluate

Analyze

Correction Plan

All the steps need to be time-bound!

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Implementing to Conduct

Collecting Information

Keep the evidence grid (we studied) in mind.

All data collected should be acquired through the “focal”

point.

Always keep one contact person.

Keep your eyes and ears open for any observations.

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Implementing to Conduct

Evaluate

Give meanings / Try to make sense of the data given.

Note your disagreements.

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Implementing to Conduct

Analyze

Compare Against standards, SOPs, Best practice or Law.

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Implementing to Conduct

Correction Plan

Determine which categories need the “most” attention.

Have a Buy-in from concerned person / team.

Develop exact actions to be taken (time bound)

Have responsible persons identified to carry-out the action

plan.

Control, Monitor and Follow-up to verify.

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HR Functions to

Audit

Module - IV

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HR Functions to Audit

Which areas may be addressed:

HR Strategic Management

Workforce Planning / Budgeting & Selection

Training & Development

Labor Relations

Safety & Security

HRIS

HR Facilities & Equipments

HR Staff – JDs.

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HR Functions to Audit

Contd…

Communications

Technology

Termination

Legal Issues

Performance Management

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HR Functions to Audit

Recruitment & Selection

Compensation & Benefits

Orientation & Placement

Training & Development

Performance Management

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HR Functions to Audit

Recruitment & Selection

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HR Functions to Audit

Recruitment & Selection

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HR Functions to Audit

Compensation & Benefits

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HR Functions to Audit

Compensation & Benefits

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HR Functions to Audit

Orientation & Placement

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HR Functions to Audit

Orientation & Placement

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HR Functions to Audit

Training & Development

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HR Functions to Audit

Training & Development

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HR Functions to Audit

Performance Management

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HR Functions to Audit

Performance Management

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Analyze

to Recommend

Module - V

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Analyze to Recommend

Analyze Data

Data needs to be clear and error free

Evaluate if the right questions have been asked or not?

Check if all records and the overall record keeping process was inplace or not?

Note down any observations you may have.

Compare the results with standards or SOPs.

Make sure your recommendations are realistic

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Analyze to Recommend

Identifying Areas of Improvement

Determine the Areas that need immediate attention

For each area design an improvement plan with timeline andbudgets

Have the plan reviewed by the process owners

Decide on the interval of time and implementation & measureplan.

Design a follow-up mechanism.

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Analyze to Recommend

Preparing Recommendations

Results are best provided in the form of Charts or Heat Maps

(Refer to sample heat map)

Don’t forget the classic rule of keeping it simple for Senior

Management to understand

Include all and any resources required

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Reporting

to Present

Module - VI

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Reporting to Present

Documenting the findings

Make sure you obtain copies of all records / documents you reviewed

You must know the source of the document (from whom youreceived)

Ideally you should have a single point of contact and all details mustbe received through this point of contact only

Keep your checklist / note book handy

Make notes of any observations you may have

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Reporting to Present

Presenting the recommendations

Rather than TEXT, graphical representation of data is more

effective.

Have the recommendations run by the middle management (if

appropriate).

The report should be concise and interesting.

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Reporting to Present

Preparing an HRA Report

The report should have the following (IIA declared)

traits

Accurate

Constructive

Objective

Complete

Clear

Timely

Concise

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Reporting to Present

Preparing an HRA Report

Plan the Report (decide the basic sections that need

to be included)

Draft the Report (type out the text and check the

same)

Revise the Report (before submission)

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Reporting to Present

Preparing an HRA Report

Auditor (Writer) VS Reader Mindset

Auditor:

I want to show you lots of data!

Accuracy

Reasoning & Graphs

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Reporting to Present

Preparing an HRA Report

Auditor (Writer) VS Reader Mindset

Reader

I want a report that is easy to read & understand.

Accurate, Brief and to the point.

Bottom line first and details later.

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New Trends in HR

Human Resource Management is now becoming Human

Capital Management.

Human Assets are being viewed as good as Financial

Assets.

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Muaz Popatia

[email protected]

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